By Alvin Cheng-Hin Lim

The China-Pakistan Economic Corridor One Year On

It
has just been over a year since Chinese President Xi Jinping announced the
China-Pakistan Economic Corridor (CPEC) during his inaugural state visit to
Pakistan in April 2015. What has been the progress of the construction of the
megaproject since then? Zhang Baozhong, the chairman of China Overseas Ports,
the company that will run the Pakistani port of Gwadar, stated in late April
2016 that Gwadar will commence full operations by the end of 2016. Gwadar is
essential to CPEC as it will connect CPEC with shipping on the Arabian Sea; and
being close to the Straits of Hormuz, will serve as a strategic gateway for
Middle Eastern oil shipments to be transported overland to China via CPEC’s
planned oil pipelines. Logistics will be transformed by CPEC, as container
ships that today have to make the “the nearly 13,000 km sea voyage from Tianjin
to the Persian Gulf through the Strait of Malacca and around India” can be
replaced by cheaper container trucks that make “a mere 2,000 km road journey
from Kashgar to Gwadar” (Lim, 2015; “Gwadar Port,” 2016; “China-Pakistan,” 2016).

Infrastructure
that will connect Gwadar with the Chinese city of Kashgar in Xinjiang include highways
and railways. Progress has been made this past year on the highway network. A
335 km section of the Karakoram Highway between the Sino-Pakistani border city
of Khunjerab to Raikot has been upgraded, and a 59 km section of the Hazara
Motorway between Burhan and Havelian is expected to be completed by the end of
2017 (Siddiqui, 2016). Pakistan’s Prime Minister Nawaz Sharif is scheduled to
visit Dera Ismael Khan on May 17, 2016 to inaugurate the CPEC Western Route. The
initial phase of the Western Route — which when completed will connect Havelian
with Gwadar — consists of a 285 km highway between Hakla and Yarik, including
“eleven interchanges, nineteen flyovers, fifteen bridges, seventy-four
underpasses, two hundred fifty-nine culverts, and three major bridges” (“PM to
inaugurate,” 2016; “PM to open,” 2016). For the CPEC Eastern Route,
construction work is expected to begin soon as China’s State Council has just approved
a 4.2 billion USD concessionary loan package for a 120 km section of the
Karakoram Highway II between Thakot and Havelian, and a 392 km section of the
Lahore-Karachi Motorway between Multan and Sukkur (“Pakistan, China,” 2016).
Apart from the construction of highways, CPEC’s transportation infrastructure also
includes the construction of rail lines, dry ports, as well as the Gwadar
airport, the construction of which is scheduled to commence in the middle of
2016. Energy infrastructure — including hydropower dams — and industrial zones
will also be constructed under the CPEC framework. By 2030, when projects under
the third and final phase of CPEC are scheduled to be completed, the
populations living in the currently underdeveloped communities in the CPEC
region are expected to enjoy the economic benefits of industrial development provided
by the new infrastructure (Yousafzai, 2016; “CPEC to Benefit,” 2016).

In
terms of regional economic integration, CPEC has attracted interest from Iran and
the countries of Central Asia (Daud, 2016; “Central Asian states,” 2015). The 2015
accessions of Afghanistan and Kazakhstan to the World Trade Organization, and
regional trade agreements like the quadrilateral transit trade agreement
between China, Kyrgyzstan, Kazakhstan, and Pakistan, have facilitated regional integration
through trade, and CPEC is envisioned to accelerate this process of economic
integration and transform Pakistan into a Central and South Asian economic hub.
Indeed, despite reservations from India, which we shall shortly see, CPEC
promises to serve as “a bridge between three engines of growth, China, South
Asia and Central Asia, thus giving a stimulus to a deep regional economic
integration and creating a trading bloc of 3 billion people, nearly half of the
planet” (“Pakistan striving,” 2015). Pakistan’s Commerce Minister Khurram
Dastagir notes that should the economic promise of CPEC come to fruition, this
will offer significant progress for global development:

“Mind
you these also include half of world’s extreme poor. The deepening of economic
integration will lower trade costs, essential for ending poverty. Trade is a
critical enabler of growth, opening up opportunities of new and better work for
the poor.”(“Pakistan
striving,” 2015)

Security Concerns

Security
threats to CPEC may have expanded over the past year. Pakistan’s security apparatus
has recently highlighted a threat from India’s and Afghanistan’s intelligence
services “to encourage and assist Baloch violence against the CPEC” (Lee,
2016a). In March 2016, Pakistani security forces arrested an alleged Indian spy
in Balochistan, a province with major CPEC projects, including the port of
Gwadar (Johnson, 2016). The following month, General Raheel Sharif, Pakistan’s
Chief of Army Staff, identified India’s intelligence agency RAW (Research and
Analysis Wing) as being “blatantly involved in destabilizing” Pakistan and CPEC
(Yousuf, 2016).

M. K. Narayanan, a former
Indian National Security Adviser, states bluntly that CPEC poses a “major
threat” to India.

One
reason for the alleged Indian interference is the section of CPEC which extends
through Gilgit Baltistan to the Sino-Pakistani border. This is disputed
territory which India identifies as Pakistan-occupied Kashmir (PoK). Indeed,
India’s Minister of State for External Affairs V. K. Singh recently stated that
CPEC will extend “through a territory which belongs to India” (“Raised
concerns,” 2016). (Pakistan’s Finance Minister Ishaq Dar has rebutted such
claims, stating that CPEC will only extend through Pakistani territory (Kiani,
2015).) This has drawn the attention of anti-Chinese nationalists in India who
see this as an attack by China on Indian interests (Lee, 2016b). Some, for
example, see China as a “a reliable ally” of Pakistan’s that “has always come
to Pakistan’s aid when India has seemed on the ascendant,” and that its planned
CPEC projects in Gilgit Baltistan will legitimize what India has identified as
“Pakistan’s illegal occupation of these areas” (Pant, 2016). These are not
fringe views. M. K. Narayanan, a former Indian National Security Adviser,
states bluntly that CPEC poses a “major threat” to India, and that China’s “One
Belt One Road” global development strategy, of which CPEC is a showpiece
megaproject, could have “the most degrading impact” on Sino-Indian relations
(“Raised concerns,” 2016).

To
counter what they see as China’s geostrategic advancements through its CPEC
initiative, some Indian strategists recommend the military capture of Gilgit
Baltistan and the rest of PoK, especially since this territorial seizure would
“provide India a direct land link to Afghanistan and thence to the Central
Asian Republics, both of which are increasingly falling into the Chinese sphere
of economic and political influence” (Kalyanaraman, 2016). Of course, should a
war between India and Pakistan over Kashmir break out, China would find itself
dangerously entangled in a likely nuclear exchange between India and Pakistan. Worrisomely,
India is not the only geostrategic threat to CPEC. As Peter Lee recounts:

“On
the other hand, you have diehard separatists in Balochistan, PoK, Xinjiang, and
Tibet eager to make it fail. You’ve got a pool of resentful Islamist extremists
near the route of the CPEC in Pakistan, Xinjiang, Afghanistan, and Uzbekistan.
You have China hawks in India and the United States who would be happy to see
the CPEC turn into quagmire for the PRC.”(Lee,
2016a)

As
CPEC progresses past its first year of construction, its Pakistani and Chinese
overseers will have to ensure that their security and intelligence apparatuses remain
alert to these and all other possible threats to the megaproject.

China-Pakistan
Economic Corridor: Pakistan’s road of high hopes. (2016, April 18). The Indian Express. Retrieved from
http://indianexpress.com/article/explained/cpec-pakistan-china-nawaz-sharif-xi-jinping-2758111/

Daud,
K. (2016, April 16). Iran ready to become part of China Pakistan Economic
Corridor. Daily Pakistan. Retrieved
from http://en.dailypakistan.com.pk/headline/iran-ready-to-become-part-of-cpec/

Gwadar
Port will be operating fully by end of this year, says Zhang Baozhong. (2016,
April 23). INP. Retrieved from
http://nation.com.pk/national/23-Apr-2016/gwadar-port-will-be-operating-fully-by-end-of-this-year-says-zhang-baozhong

Kiani,
K. (2015, June 3). 3bn people to benefit from CPEC: Dar. Dawn. Retrieved from http://www.dawn.com/news/1185842

Lee,
P. (2016a, May 11). SCS for South China Sea aren’t the scariest letters in the
world … they’re CPEC. Asia Times.
Retrieved from
http://atimes.com/2016/05/csc-for-south-china-sea-arent-the-scariest-letters-in-the-world-theyre-cpec/

Pakistan
striving to become the economic hub for central Asia. (2015, December 16). The News International. Retrieved from
http://www.thenews.com.pk/print/82201-Pakistan-striving-to-become-the-economic-hub-for-central-Asia

Pant,
H. V. (2016, April 15). The China-Pakistan axis gains momentum and could pull
India into a war on two fronts. Daily
Mail. Retrieved from http://www.dailymail.co.uk/indiahome/article-3542499/The-China-Pakistan-axis-gains-momentum-pull-India-war-two-fronts.html

PM
to inaugurate CPEC Western Route on Tuesday. (2016, May 15). Pakistan Observer. Retrieved from http://pakobserver.net/2016/05/15/pm-to-inaugurate-cpec-western-route-on-tuesday/

About The Author

Alvin Cheng-Hin Lim is a research fellow with International Public Policy Pte. Ltd. (IPP), and is the author of Cambodia and the Politics of Aesthetics (Routledge 2013). He received his Ph.D. in Political Science from the University of Hawaii at Manoa, and has taught at Pannasastra University of Cambodia and the American University of Nigeria. Prior to joining IPP, he was a research fellow with the Longus Institute for Development and Strategy.